10QSB

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-QSB

(MARK ONE)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES AND EXCHANGE ACT OF 1934

For Quarterly Period Ended June 30, 2004

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES AND EXCHANGE ACT OF 1934

Commission File Number: 0-26804

PLANET POLYMER TECHNOLOGIES, INC.

(Exact name of small business issuer as specified in its character)

CALIFORNIA	33-0502606
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

6835 Flanders Drive, Suite 100, San Diego, California	92131
(Address of principal executive offices)	(Zip Code)

(619) 291-5694

(Issuer’s telephone number, including area code)

Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

           [X] YES                      [  ] NO

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

Class	Outstanding at June 30, 2004
Common Stock, no par value	6,582,884

INDEX

			Page No.
PART I - Financial Information
	Item 1	Condensed Balance Sheet (Unaudited) June 30, 2004		2
		Condensed Statements of Operations (Unaudited) Three and Six Months Ended June 30, 2004 and 2003		3
		Condensed Statement of Shareholders’ Equity (Unaudited) Six Months Ended June 30, 2004		4
		Condensed Statements of Cash Flows (Unaudited) Six Months Ended June 30, 2004 and 2003		5
		Notes to Unaudited Condensed Financial Statements		6
	Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations		10
	Item 3	Controls and Procedures		12
PART II - Other Information
	Item 1	Legal Proceedings		12
	Item 2	Changes in Securities and Use of Proceeds		12
	Item 3	Defaults upon Senior Securities		12
	Item 4	Submission of Matters to a Vote of Security Holders		12
	Item 5	Other Information		12
	Item 6	Exhibits and Reports on Form 8-K		13
SIGNATURES				13
EXHIBIT 10.1
EXHIBIT 31.1
EXHIBIT 32.1

PLANET POLYMER TECHNOLOGIES, INC.

CONDENSED BALANCE SHEET (UNAUDITED)

	June 30,
	2004
ASSETS
Current assets:
Cash	$	179,663
Prepaid expenses		941
Total current assets		180,604
Patents, trademarks and license agreements, net of accumulated amortization of $85,375		145,961
Total assets	$	326,565
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities - accounts payable	$	232,531
Commitments and contingencies
Shareholders’ equity:
Preferred Stock, no par value 4,250,000 shares authorized, no shares issued or outstanding		—
Series A Convertible Preferred Stock, no par value 750,000 shares authorized, no shares issued or outstanding		—
Common Stock, no par value, 20,000,000 shares authorized, 6,582,884 shares issued and outstanding		11,678,241
Additional paid-in capital		3,000,000
Accumulated deficit		(14,584,207	)
Total shareholders’ equity		94,034
Total liabilities and shareholders’ equity	$	326,565

SEE NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

2

PLANET POLYMER TECHNOLOGIES, INC.

CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)

	Three months ended June 30,						Six months ended June 30,
	2004			2003			2004			2003
Revenues	$	—		$	10,720		$	57,444		$	166,340
Operating expenses:
Cost of revenues		2,781			1,221			3,703			2,442
General and administrative		127,295			107,347			309,047			270,184
Total operating expenses		130,076			108,568			312,750			272,626
Loss from operations		(130,076	)		(97,848	)		(255,306	)		(106,286	)
Other income, net		9,532			278,548			10,715			287,488
Net income (loss) applicable to common shareholders	$	(120,544	)	$	180,700		$	(244,591	)	$	181,202
Net income (loss) per share applicable to common shareholders (basic and diluted)	$	(0.02	)	$	0.03		$	(0.04	)	$	0.03
Weighted average shares outstanding used in per share computations		6,495,796			6,207,884			6,355,137			6,207,884

SEE NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

3

PLANET POLYMER TECHNOLOGIES, INC.

CONDENSED STATEMENTS OF SHAREHOLDERS’ EQUITY (UNAUDITED)

Six Months Ended June 30, 2004

	Common Stock
					Additional		Accumulated
	Shares		Amount		Paid-in Capital		Deficit			TOTAL
Balance at January 1, 2004		6,207,884	$	11,648,991	$	3,000,000	$	(14,339,616	)	$	309,375
Exercise of stock options		375,000		29,250		—		—			29,250
Net loss		—		—		—		(244,591	)		(244,591	)
Balance at June 30, 2004		6,582,884	$	11,678,241	$	3,000,000	$	(14,584,207	)	$	94,034

4

PLANET POLYMER TECHNOLOGIES, INC.

CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)

	Six months ended June 30,
	2004			2003
Cash flows from operating activities:
Net income (loss)	$	(244,591	)	$	181,202
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		7,379			9,768
Bad debts		2,881			—
Gain on sale of property and equipment		—			(1,300	)
Gain on sale of long-lived assets		—			(275,610	)
Changes in operating assets and liabilities:
Accounts receivable		13,626			8,154
Prepaid expenses and other assets		2,939			4,071
Accounts payable		164,031			44,223
Accrued expenses		—			(21,942	)
Net cash used in operating activities		(53,735	)		(51,434	)
Cash flows from investing activities:
Proceeds from the sale of property and equipment		—			1,300
Proceeds from notes receivable		185,604			84,934
Net cash provided by investing activities		185,604			86,234
Cash flows from financing activities - proceeds from exercise of stock options		29,250			—
Net increase in cash		161,119			34,800
Cash at beginning of period		18,544			14,781
Cash at end of period	$	179,663		$	49,581

SEE NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

5

Planet Polymer Technologies, Inc.

NOTES TO UNAUDITED CONDENSED
FINANCIAL STATEMENTS

1. Basis of Presentation

     In management’s opinion, the accompanying unaudited financial statements of Planet Polymer Technologies, Inc. (“Planet” or the “Company”) have been prepared in accordance with the interim reporting requirements of Form 10-QSB, pursuant to the rules and regulations of the Securities and Exchange Commission. However, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.

     In management’s opinion, all adjustments (consisting of only normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, 2004, are not necessarily indicative of results that may be expected for the year ending December 31, 2004. For additional information, refer to the Company’s financial statements and notes thereto for the year ended December 31, 2003, contained in the Company’s Form 10-KSB for the fiscal year ended December 31, 2003.

     Certain prior period amounts have been reclassified to conform to the current period presentation.

2. Liquidity and Capital Resources

     The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. For the six months ended June 30, 2004, the Company incurred a loss of $244,591. As of June 30, 2004, the Company had an accumulated deficit of $14,584,207. These matters raise substantial doubt about the Company’s ability to continue as a going concern. The Company does not believe that its existing sources of liquidity and anticipated revenue will be adequate to satisfy the Company’s projected working capital and other cash requirements through December 31, 2004, to continue as a public reporting company without raising additional capital or consummating a business combination (see below). For the six months ended June 30, 2004, the Company had no employees and did not conduct any research or development. The Company’s future capital requirements will be dependent upon many factors, including, but not limited to, costs associated with the continued support of licenses on the Company’s proprietary polymer materials, costs associated with the enforcement of the Company’s patents, and costs associated with the administration of the Company. Although possible, it is unlikely that the Company will be able to generate positive cash flow and show a profit through December 31, 2004.

     On March 22, 2004, the Company and Allergy Free, LLC (“Allergy Free”) announced that on March 18, 2004, they had entered into an Asset Purchase Agreement (“Agreement”). As subsequently amended, the Agreement provides for the Company to acquire certain assets and assume certain liabilities of Allergy Free for which the Company will provide the following consideration: a subordinated convertible note in the approximate principal amount of $274,300 bearing interest at 5.5% per annum and due and payable within three (3) years and approximately 82,732,970 shares of common stock of the Company. Additionally, the Company will assume approximately $611,000 of Allergy Free’s liabilities as of March 31, 2004 (plus, all obligations arising under assumed contracts which arise after the closing). As a result, after the closing of the Agreement and the conversion of the notes and related interest payable, the members of Allergy Free will own approximately 92.7% of the voting shares of the Company. Since the members of Allergy Free will receive the majority of the voting shares of the

6

Planet Polymer Technologies, Inc.

NOTES TO UNAUDITED CONDENSED
FINANCIAL STATEMENTS

Company, the current president of Allergy Free will become president of the Company and since representatives of Allergy Free will hold three of the five seats on the Company’s Board of Directors, the merger will be accounted for as a reverse acquisition whereby Allergy Free will be the accounting acquirer (legal acquiree) and the Company will be the accounting acquiree (legal acquirer). Investors are encouraged to review, when available, the Company’s Proxy Statement, which will be available through EDGAR at www.sec.gov.

3. Earnings (Loss) Per Share

     Earnings (loss) per share is computed using the weighted average number of shares of common stock outstanding and is presented for basic and diluted earnings (loss) per share. Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings per share is computed by dividing net income by the weighted average number of common shares outstanding during the period increased to include, if dilutive, the number of additional common shares that would have been outstanding if the potential common shares had been issued. Dilutive potential common shares consist of the incremental common shares issuable upon conversion of the convertible preferred stock (using the “if converted” method) and exercise of stock options and warrants (using the treasury stock method) for all periods.

     The Company has excluded all convertible preferred stock and outstanding stock options and warrants from the calculation of diluted loss per share for the three and six months ended June 30, 2004 and 2003, because all such securities are either anti-dilutive for those periods or their impact was insignificant. Accordingly, diluted loss per share equals basic loss per share. The total number of potential common shares excluded from the calculation of diluted loss per share for the six months ended June 30, 2004 and 2003 were as follows:

	2004		2003
Warrants		100,000		255,000
Options		104,500		1,159,941
Total		204,500		1,414,941

4. Income Taxes

     As the ultimate realization of the potential benefits of the Company’s net operating loss carryforwards is considered unlikely by management, the Company has offset the deferred tax assets attributable to those potential benefits through valuation allowances and, accordingly, the Company did not recognize any benefit for income taxes in the accompanying condensed statements of operations to offset its pre-tax losses.

5. Stock-Based Compensation

7

Planet Polymer Technologies, Inc.

NOTES TO UNAUDITED CONDENSED
FINANCIAL STATEMENTS

     As explained in Note 10 in the Form 10-KSB, the Company accounts for stock options granted to employees based on their intrinsic values under the recognition and measurement principles of APB Opinion No. 25, “Accounting for Stock Issued to Employees, and Related Interpretations,” and has adopted the disclosure-only provisions of Statement of Financial Accounting Standards (SFAS) No. 123, “Accounting for Stock-Based Compensation,” and the provisions of Statement of Financial Accounting Standards No. 148 “Accounting for Stock-Based Compensation – Transition and Disclosure-an Amendment of FASB Statement No. 123.” Since the exercise price of all of the options granted by the Company to its employees has been equal to or greater than fair value, the Company has not recognized any earned or unearned compensation costs in its financial statements in connection with those options. The Company’s historical net income (loss) per share and pro forma net income (loss) per share for the three and six months ended June 30, 2004 and 2003, assuming compensation cost had been determined based on the fair value of all options at the respective dates of grant determined using a pricing model consistent with the provisions of SFAS 123 are set forth below:

8

Planet Polymer Technologies, Inc.

NOTES TO UNAUDITED CONDENSED
FINANCIAL STATEMENTS

	Three Months Ended June 30						Six Months Ended June 30
	2004			2003			2004			2003
Net income (loss), as reported	$	(120,544	)	$	180,700		$	(244,591	)	$	181,202
Stock-based employee compensation expense assuming a fair value based method had been used for all awards		(11,447	)		(14,000	)		(22,894	)		(27,400	)
Net income (loss), pro forma	$	(131,991	)	$	166,700		$	(267,485	)	$	153,802
Basic earnings (loss) per share, as reported	$	(0.02	)	$	0.03		$	(0.04	)	$	0.03
Basic earnings (loss) per share, pro forma	$	(0.02	)	$	0.03		$	(0.04	)	$	0.02

6. Ryer Enterprises, LLC Assignment to Ryer, Inc.

     During the first quarter of 2004, the Company agreed to forbear the February and March installment payments due from Ryer Enterprises, LLC in exchange for a two (2) month extension of the installment payments plus an additional installment payment of $4,600.

     During the period ended June 30, 2004, the obligations of Ryer Enterprises, LLC under the May 1, 2003 Agreement with the Company were assigned, with the Company’s approval, to Ryer, Inc., a California corporation (“Assignment”). As part of the Assignment, Ryer, Inc. paid the April and May 2004 installments to the Company on behalf of Ryer Enterprises, LLC. In addition, on June 23, 2004, the Company received a payment from Ryer, Inc. of approximately $161,000 to satisfy the remaining balance of the note.

9

PART 1 – FINANCIAL INFORMATION

Item 2 – Management’s Discussion and Analysis of Financial
Condition and Results of Operations

Planet Polymer Technologies, Inc.

Except for the historical information contained herein, the discussion in this report contains forward-looking statements that involve certain risks and uncertainties. The Company’s actual results could differ materially from those discussed in this report. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and in the Company’s Form 10-KSB for the fiscal year ended December 31, 2003.

OVERVIEW

     Since Planet Polymer Technologies, Inc. (“Planet” or the “Company”) was founded in 1991 substantially all of the Company’s resources have been devoted to the development and commercialization of its technologies and products. This has included the expenditure of funds to develop the Company’s corporate infrastructure and support the Company’s research and development of products, marketing, licensing of products to third parties and corporate administration. For the six month period ended June 30, 2004, the Company did not engage in any research and development and did not incur any employee expense.

     Planet had an accumulated deficit as of June 30, 2004, of approximately $14.6 million. The Company’s only anticipated source of revenues is from royalties from BASF, Alltech and Ryer, Inc., which are not expected to be sufficient to result in a net profit through December 31, 2004.

RESULT OF OPERATIONS

     The net loss for the six months ended June 30, 2004, was $244,591 compared to a net income of $181,202 for the six month period ended June 30, 2003. This decrease is a result of a decline in revenues and the Company incurring higher legal expenses and costs for the six months ended June 30, 2004, due to the pending acquisition agreement with Allergy Free, LLC. The Company had no revenues for the six months ended June 30, 2004 compared to $10,720 for the same period in 2003.

     Effective January 15, 2004, Agway entered into an agreement to sell all of the assets of its FreshSeal® business, which include the fruit/produce patent rights assigned by the Company, to BASF. Also, in January 2004, Agway sold all of its right and interest to Optigen® to Alltech. Management cannot assure that the Company will receive significant, if any, royalties and monies under these Sale and Licensing Agreements. The Company is hopeful BASF and Alltech will continue to commercialize the intellectual property and provide future royalty revenue streams to the Company.

     In April 2003, the Company recovered the assets sold to Ryer Industries, LLC, and by agreement dated as of May 1, 2003, resold the assets to Ryer Enterprises, LLC (“Ryer Enterprises”). Pursuant to said agreement, the Company licensed to Ryer Enterprises, the patent rights relating to the AQUAMIM® products for royalties which are payable monthly forty-five days after the close of each month for 8 years after which Planet has agreed to transfer the patents to Ryer Enterprises, provided it is not in default. In June 2004, with the approval of the Company, the obligations of Ryer Enterprises under the May 1, 2003 agreement with the Company were assigned to and assumed by Ryer, Inc., a California corporation (“Assignment”). On June 23, 2004, as a result of the Assignment, the Company received a payment from Ryer, Inc. of approximately $161,000 to satisfy the note relating to the AQUAMIM® products and the Agreement. Concurrently, the Company entered into a Royalty Contract with Ryer, Inc. redefining on

10

PART 1 – FINANCIAL INFORMATION
Item 2 – Management’s Discussion and Analysis of Financial
Condition and Results of Operations

Planet Polymer Technologies, Inc.

what sales and how royalty payments are to be made and pursuant to which the Company assigned all patent rights related to AQUAMIM® technology to Ryer, Inc.

     Cost of revenues increased to $2,781 for the three months ended June 30, 2004, from $1,221 for the same period in 2003 due primarily to amortization of intangible assets.

     Total operating expenses increased to $312,750 for the six months ended June 30, 2004, from $272,626 for the same period in 2003. This increase was primarily attributable to higher legal expenses and costs incurred in the six months ended June 30, 2004, due to the pending acquisition agreement with Allergy Free, LLC.

     Similar to the second quarter of 2003, the Company incurred no research and development expenses. Unless and until the Proposed Acquisition is completed, the Company anticipates limited or no further research and development activities on new products.

     Other income, net decreased from approximately $287,488 for the six months ended June 30, 2003, to $10,715 for the same period in 2004. This decrease reflects a one time gain on sale of fixed assets and certain license revenue from Agway in 2003.

LIQUIDITY AND CAPITAL RESOURCES

     The Company had net cash used in operating activities of $53,735 for the six months ended June 30, 2004. This negative cash flow was due primarily to increased accounting and legal expenses resulting from the proposed asset purchase agreement between Allergy Free, LLC and the Company.

     The Company does not believe that its existing sources of liquidity and anticipated revenue will be adequate to satisfy the Company’s projected working capital and other cash requirements through September 2004 to continue operations as a public reporting company without raising additional capital or consummating a business merger (see below).

     On March 22, 2004, the Company and Allergy Free, LLC (“Allergy Free”) announced that on March 18, 2004, they had entered into an Asset Purchase Agreement (“Agreement”). As subsequently amended, the Agreement provides for the Company to acquire certain assets and assume certain liabilities of Allergy Free for which the Company will provide the following consideration: a subordinated convertible note in the approximate principal amount of $274,300 bearing interest at 5.5% per annum and due and payable within three (3) years and approximately 82,732,970 shares of common stock of the Company. Additionally, the Company will assume approximately $611,000 of Allergy Free’s liabilities as of March 31, 2004 (plus, all obligations arising under assumed contracts which arise after the closing). As a result, after the closing of the Agreement and the conversion of the notes and related interest payable, the members of Allergy Free will own approximately 92.7% of the voting shares of the Company. Since the members of Allergy Free will receive the majority of the voting shares of the Company, the current president of Allergy Free will become president of the Company and since representatives of Allergy Free will hold three of the five seats on the Company’s Board of Directors, the merger will be accounted for as a reverse acquisition whereby Allergy Free will be the accounting acquirer (legal acquiree) and the Company will be the accounting acquiree (legal acquirer). Investors are

11

PART 1 – FINANCIAL INFORMATION
Item 2 – Management’s Discussion and Analysis of Financial
Condition and Results of Operations

Planet Polymer Technologies, Inc.

encouraged to review, when available, the Company’s Proxy Statement which will be available through EDGAR at www.sec.gov.

     If the transaction is completed, immediately prior to or concurrently with the closing, Planet will distribute to a trustee for the benefit of Planet shareholders of record as of April 15, 2004 (“Trust”), the right to receive all royalties payable to Planet pursuant to the Sale and Licensing Agreements between Planet and Agway, Inc., relating to Planet’s FreshSeal® and Optigen® technology and the certain Royalty Agreement between Planet and Ryer, Inc., relating to Planet’s AQUAMIM® technology.

ITEM 3. CONTROLS AND PROCEDURES

     The Company’s management, with the participation of the Company’s Chief Executive Officer who is also the Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures as of June 30, 2004. Based on this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective for gathering, analyzing and disclosing the information the Company is required to disclose in the reports it files under the Securities and Exchange Act of 1934, within the time periods specified in the Securities and Exchange Commission’s rules and forms.

     During the six months ended June 30, 2004, there were no significant changes in the Company’s internal control over financial reporting that materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1 – Legal Proceedings:

     None

Item 2 – Changes in Securities and Use of Proceeds:

     None

Item 3 – Defaults upon Senior Securities:

     None

Item 4 – Submission of Matters to a Vote of Security Holders:

     None

Item 5 – Other Information:

     None

12

Planet Polymer Technologies, Inc.

Item 6 – Exhibits and Reports on Form 8-K

     (a) Exhibits

Exhibit 10.1	Royalty Contract between the Company and Ryer, Inc., a California corporation.
Exhibit 31.1	Certification of Principal Executive Officer and Financial Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002.
Exhibit 32.1	Certification of Principal Executive Officer and Financial Officer pursuant to Section 906 of the Sarbanes Oxley Act of 2002.

     (b) Reports on Form 8-K

None.

SIGNATURES

In accordance with the requirements of Exchange Act, the Registrant has duly caused this report on Form 10-QSB to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: August 16, 2004	Planet Polymer Technologies, Inc.
		/s/ H. M. Busby
		H. M. Busby
		Chief Executive Officer
		(On behalf of Registrant and as Registrant’s Principal Financial and Accounting Officer)

13

EX-10.1

                                                                    EXHIBIT 10.1


                                ROYALTY CONTRACT

      This contract ("Agreement") is made by and between PLANET POLYMER
TECHNOLOGIES, INC., a California corporation ("Planet"), and RYER, INC., a
California corporation ("Ryer") and is effective forthwith upon the execution
hereof by the parties.

                                    RECITALS

      WHEREAS,

            A. Ryer has contracted to acquire all of the assets of RYER
ENTERPRISES LLC, a Nevada limited liability company ("Ryer Enterprises"), and in
connection therewith has agreed to accept an assignment of the rights and
assumption of the duties of Ryer Enterprises under a certain Purchase, Sale and
License Agreement with Planet, dated May 1, 2003 as amended pursuant to a First
Amendment dated January 31, 2004 ("Purchase Agreement"), including but not
limited to a Secured Promissory Note and Security Agreement executed concurrent
therewith.

            B. PLANET is willing to accept Ryer as assignee of such Purchase
Agreement and Ryer agrees to assume and discharge all of the obligations
thereunder upon all of the following terms and conditions.

      WHEREFORE, in consideration of the mutual terms and conditions herein set
forth, the parties agree as follows:

      1. Warranties of Planet. Planet warrants as follows:

            1.1. Planet is a corporation duly formed, existing and in good
standing under the laws of the State of California and duly authorized by its
board of directors to enter into and perform this Agreement and this Agreement
is effective against and binding upon Planet.

            1.2. All of the obligations of Planet and to the best of Planet's
knowledge all of the obligations of Ryer Enterprises under the Purchase
Agreement, including the Secured Promissory Note and Security Agreement, have
been fully performed to date and there are no claims asserted by either party
against the other for any breach of said agreement and there are no unperformed
obligations of either party thereunder.

            1.3. Planet is the owner of the intellectual rights, subject only to
the exclusive license of Ryer Enterprises under the Purchase Agreement, which
are set forth in Exhibit B to the Purchase Agreement.


                                       1

            1.4. Except as set forth in the Purchase Agreement, Planet has not
assigned any of the intellectual rights to a third party.

            1.5. All of Planet's representations and warranties set forth in
paragraph 7 and its subparts of the Purchase Agreement are true and correct as
of the date they were made.

      2. Warranties of Ryer. Ryer warrants as follows:

            2.1. Ryer is a corporation duly formed, existing and in good
standing under the laws of the State of California and duly authorized by its
board of directors to enter into and perform this Agreement and this Agreement
is effective against and binding upon Ryer.

            2.2. Ryer has full power and authority, together with all licenses,
permits and certificates from public authorities as are necessary to own its
properties and to conduct its business where the same is now located and being
conducted, and has full power and authority to accomplish the transactions
contemplated hereby and carry out the provisions hereof.

            2.3. No broker or finder has been retained by Ryer in connection
with this transaction.

            2.4. As of the date hereof Ryer has unincumbered cash assets of
approximately $400,000 and its financial condition is reasonably adequate to
perform its obligations contemplated by this Agreement. Ryer shall have a net
worth of not less than $400,000 at the closing.

      3. Final Payment under Purchase Agreement. The parties agree that Ryer
shall pay to Planet and Planet shall accept from Ryer the cash sum of $161,000
as and for full satisfaction of all of the monetary obligations of the buyer
under the Purchase Agreement, Secured Promissory Note and Security Agreement,
other than the obligation to pay royalties as provided in paragraph 4, below.
Such payment shall be made as follows:

            3.1. The transaction whereby Ryer is acquiring the assets of Ryer
Enterprises is being handled through a Bulk Sale Escrow to be opened with New
Century Title Escrow. The escrow holder shall be instructed to furnish Planet,
through its attorney, a copy of the Bulk Sale Notice and Ryer shall submit a
demand for $161,000 together with the following:

                  3.1.1. Duly executed releases in recordable form of all liens
      and encumbrances against any and all of the assets subject to the Purchase
      Agreement;

                  3.1.2. Duly executed assignments in recordable form of all of
      the Aquamim technology, patent and other intellectual rights listed on
      Exhibit B of the Purchase Agreement, assigning all of such rights to Ryer.
      All of Planet's obligations to maintain or defend the patents shall be
      terminated at that time.

                  3.1.3. An instruction that the escrow holder shall deliver
      such documents to


                                       2

      Ryer only when it holds for Planet's account the sum of $161,000 in
      unencumbered cash.

      4. Royalties payable from Ryer to Planet. All provisions as they relate to
royalties in the Purchase Agreement shall be deemed null and void upon the
execution hereof and the payment by Ryer of $161,000 cash to Planet, through
escrow as described in 3.1 of this Agreement. Such provisions shall be replaced
with the following provisions relating to the determination and payment of
royalties.

            4.1. Royalties. During the 8-year term commencing June 1,2004 and
ending May 31, 2012 (the "Term"), Ryer shall pay to Planet royalties
("Royalties") on feedstocks or sintered products manufactured and sold to third
parties using the Aquamim water debind method or solvent debind Tungsten-Carbide
technology (the "Products"). During the term, Royalties shall be payable on or
before the 15th day of each month for Products sold by Ryer and for which Ryer
received the purchase price (in whole or in part) from the third party buyer
during the preceding calendar month. The obligation for the payment of Royalties
shall terminate at the expiration of the Term, provided that payment shall be
made on all pending orders from customers actually received by Ryer during the
term. In the event that Ryer extends credit to a customer for a period longer
than 45 days from the date of invoice, the royalty shall be due and payable on
the entire invoice as if the purchase price was received 45 days after the date
of invoice.

            4.2. Computation of Royalties. Royalties payable hereunder shall be
computed as follows:

                  4.2.1. The Royalties on any Water De-bound Feedstock or
Solvent De-bound Feedstock sold to a third party shall be computed by
multiplying the total purchase price received by Ryer for the feedstock
(excluding taxes, shipping, handling and similar charges not related to the
actual manufactured price of the feedstock) by 6% (.06). The price of feedstock
sold to Micromold, Inc., or any other affiliate of Ryer, shall be fair and not
less than the price offered to unaffiliated third parties for like feedstock in
like quantities.

                  4.2.2. The royalty on any Water De-bound Feedstock or Solvent
De-bound Tungsten-Carbide Feedstock manufactured into a finished product and
sold to a third party shall be computed by dividing the sintered shipped weight
(as that term is defined in Section 4.2.2.1 of this Agreement) by 94% (.94) and
then multiplying that sum by the lowest feedstock sales price offered to
unaffiliated third parties for similar quantities and then multiplying that sum
by 6% (.06), as follows:

     (Shipped Weight / .94) x Lowest Published Price x .06 =Royalty Payable

                  4.2.2.1. "Shipped weight" as used in this Agreement shall mean
the weight of the actual product less packaging materials, pallets, bags, cans
and/or similar materials used to package, transport or protect shipped products
("Shipped Weight").



                                       3

                  4.2.3. The Shipped Weight of any sintered Products shall be
documented by the weighing of the Products and recordation on the invoice to the
buyer by line item. This weight shall be used for the calculation set forth in
Section 4.2.2 of this Agreement.

                  4.2.4. Royalties payable by Ryer to Planet under Section 4.1
of this Agreement shall be based on Products sold, delivered, invoiced and paid
for during the Term. Copies of the Invoices together with an accounting
of outstanding invoices (whether or not paid), orders received for Product and
in process and the payments received from the third party buyers thereon shall
accompany each monthly payment of royalties.

                  4.2.5. Planet shall have the right to conduct a compliance
audit at any time during the Term up to 60 days following its expiration. The
records will be stored at Micromold, Inc., 2100 Iowa Avenue, Riverside,
California 92507 (909) 684-7130 (or at such other place as may be designated in
writing by Ryer) and written notice of audit shall be directed to Ryer's CFO
(presently Brenda Michelsen) at least five work days in advance of the audit.

                  4.2.6. Royalties will be payable only on Products sold,
delivered and paid for by the buyer. No Royalties shall be paid or payable on
account of scrap, testing, samples, inventory shrink or loss of Product, or for
Product sold but not paid for in whole or in part. The Royalty shall become
payable only upon receipt by Ryer of the purchase price therefor.
Notwithstanding the foregoing, where the customer is Micromold, Inc., the right
to payment of the Royalty will accrue to Planet upon invoicing, whether or not
payment has been made thereon, provided, however, that no royalty shall be
payable on account of Ryer's reprocessing of green runners into pellets for
Micromold, Inc.

      5. Confidential Information. Both parties shall maintain in confidence all
proprietary information received or disclosed to the other in connection with
this Agreement. Neither party shall disclose any proprietary information for its
own use or for any other persons' benefit other than as is expressly permitted
by this Agreement without the prior written consent of the owner of the
proprietary information. Both parties shall abide by the reasonable
confidentiality restrictions imposed by the other party from time to time for
proprietary information.

      6. General provisions.

            6.1. Jurisdiction. Each party consents to the exclusive jurisdiction
of the state and federal courts sitting in either San Diego or Riverside County,
California in any action or claim arising out of or under this Agreement or the
transactions contemplated by this Agreement. Each party further agrees that
personal jurisdiction over it may be effected by service of process by
registered or certified mail addressed as provided in section 6.2 of this
Agreement, and that when so made shall be as if served upon it personally within
the State of California.

            6.2. Notices. All notices, requests, consents and other
communications between the parties required or permitted under this Agreement
shall be in writing and shall be personally



                                       4

delivered or mailed by using first-class, registered or certified mail, postage
prepaid, to the following addresses or to such other address as the parties
hereto may designate in writing, or by facsimile to the numbers set forth below.

                  Planet:     H. M. Busby
                              Planet Polymer Technologies, Inc.
                              9985 Business Park Avenue
                              San Diego, CA 92131

                  W/copy to:  Blanchard, Krasner & Flinch, P.C.
                              800 Silverado Street, 2nd Floor
                              La Jolla, CA 92037
                              Attn: Robert W. Blanchard

                  Ryer:       Ryer, Inc.
                              2100 Iowa Avenue
                              Riverside, CA 92507-2413
                              Attn: Robert D. Aust

                  W/copy to:  Stephen R. Smith
                              Law Offices of Stephen R. Smith
                              41877 Enterprise Circle North, Ste 220
                              Temecula, CA 92590

All such notices, requests, consents and other communications shall be deemed to
be properly given if delivered personally, via facsimile or, if sent by mail,
three business days after the same has been deposited with the U.S. Mail,
addressed as above, postage prepaid.

            6.3. Counterparts. This Agreement may be executed in counterparts
and all counterparts so executed shall constitute one agreement which shall be
binding on all of the parties hereto, notwithstanding that all of the parties
are not signatory to the original or same counterpart.

            6.4. Entire Agreement. This Agreement shall constitute the entire
agreement of the parties and shall supersede all prior agreements, written or
oral, concerning the subject matter hereof This Agreement was drafted through
the joint efforts and participation of the parties and their attorneys, and
shall be construed neither in favor of, nor against, either party hereto, but in
accordance with the fair and reasonable meaning hereof. The parties further
agree that this Agreement will be construed to effectuate the normal and
reasonable expectations of a sophisticated buyer and seller.



                                       5

            6.5. Waivers and amendments. No amendment, modification, supplement,
termination or waiver of any provision of this Agreement, and no consent to any
departure therefrom, may in any event be effective unless in writing and signed
by the party or parties affected thereby, and then only in the specific instance
and for the specific purpose given.

            6.6. Attorneys' fees. Each party to this Agreement shall bear its
own legal fees and any and all other expenses relating to the transactions
contemplated in this Agreement. If any party institutes any arbitration, action
or proceeding to enforce this Agreement or any provision hereof or for damages
by reason of any alleged breach of this Agreement or of any provision hereof or
for a declaration of rights hereunder, then the prevailing party in any such
arbitration, action or proceeding shall be entitled to receive from the other
party all costs and expenses, including reasonable attorneys' fees, incurred by
the prevailing party in connection with such action or proceeding.

            6.7. Headings. The headings of this Agreement are for convenience of
reference only and shall not affect the construction of any provision of this
Agreement.

            6.8. Successors and Assigns. This Agreement and the provisions
hereof shall be binding upon and inure to the benefit of each of the parties and
their successors and assigns. Either party may assign its rights under this
Agreement only with the written consent of the other, which consent shall not be
unreasonably withheld.

            6.9. Opportunity to Consult Counsel. Each party hereto acknowledges
that it has had a sufficient opportunity to consult independent legal counsel
and independent accountants concerning the provisions of this Agreement and
entered into this Agreement intending to be legally bound. The parties hereto
are relying solely upon the advice of their own independent counsel and
accountants and are not relying in any manner or way on the advice or counsel of
the other party's counsel, accountants, or other advisors.

            6.10. Time is of the Essence. All dates and times in this Agreement
are of the essence.

            6.11. Severability. If any provision of this Agreement or the
application of such provision to any person or circumstance shall be held
invalid, the remainder of this Agreement or the application of such provision to
persons or circumstances other than those to which it is held invalid shall not
be affected thereby.

            6.12. Contingency. This Agreement is contingent upon the close of
the New Century Title Escrow through which Ryer is acquiring the assets of Ryer
Enterprises, on or before June 30, 2004. In the event the close does not occur
within such period, then this contingency shall be satisfied if the said Escrow
closes thereafter and before either party has given a written notice of
termination of this Agreement to the other.

      IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed



                                       6

as of the date first set forth above.

                                     PLANET POLYMER TECHNOLOGIES, INC., a
                                     California corporation,

                                     By: /s/ H. M. Busby
                                        ----------------------------------------
                                         H. M. Busby, President

                                     RYER, INC., a California Corporation

                                     By: /s/ Robert D. Aust
                                        ----------------------------------------
                                         Robert D. Aust, Chief Executive Officer



                                    GUARANTY

Micromold, Inc., a California corporation, does hereby guarantee to Planet the
due and prompt performance of all of the obligations of Ryer, Inc. under the
foregoing agreement. Pursuant to California Civil Code Section 2856, Micromold,
Inc., as Guarantor, waives all rights and defenses that are or may become
available to Guarantor by reason of California Civil Code Sections 2787 to 2855,
inclusive, including without limitation, any rights or defenses arising out of
an election of remedies by Planet, This Guaranty and the provisions hereof shall
be binding upon and inure to the benefit of each of the parties and their
successors and assigns. Either party may assign its rights and benefits under
this Guaranty only upon the written approval of the other first had and
received, which approval shall not be unreasonably withheld.

                                     MICROMOLD, INC., a California corporation



                                     By: /s/ Robert D. Aust
                                        ----------------------------------------
                                         Robert D. Aust, President

EX-31.1

Exhibit 31.1

           CERTIFICATION OF PRINCIPAL EXECUTIVE AND FINANCIAL OFFICER
            PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, H. M. Busby, certify that:

1. I have reviewed this quarterly report on Form 10-QSB of Planet Polymer
Technologies, Inc.

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4. I am responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and
internal control over financial reporting (as defined in Exchange Act Rules
13(a)-15(f) and 15(d)-15(f)) for the small business registrant and have:

      a)    designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under my supervision, to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to me by others within those entities,
particularly during the period in which this quarterly report is being prepared;

      b)    [Intentionally omitted.]

      c)    evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this quarterly report my conclusions about the
effectiveness of the disclosure controls and procedures as of the end of the
period covered by this quarterly report based on my evaluation; and

      d)    disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's most
recent fiscal quarter that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting;

5. I have disclosed, based on my most recent evaluation of internal control over
financial reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent function):

      a)    all significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and

      b)    any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls over financial reporting.

Date: August 16, 2004                        /s/ H. M. Busby
                                             -------------------------------
                                             H. M. Busby
                                             Chief Executive Officer and
                                             Chief Financial Officer

EX-32.1

Exhibit 32.1

           CERTIFICATION OF PRINCIPAL EXECUTIVE AND FINANCIAL OFFICER
            PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

      In connection with the Quarterly Report of Planet Polymer Technologies,
Inc. (the "Company") on Form 10-QSB for the period ended June 30, 2004 as filed
with the Securities and Exchange Commission on the date hereof (the "Report"),
I, H. M. Busby, Chief Executive Officer and Chief Financial Officer of the
Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, that:

      (1)   The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and

      (2)   The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.

Date: August 16, 2004

/s/ H. M. Busby
- -------------------------------
H. M. Busby
Chief Executive Officer and
Chief Financial Officer